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Search engine wars : Yahoo and Google



It's Google again. Or is it?

Yahoo! announced last week that it has renewed its contract with Google to provide merged search results with its existing directory listings. The contract represents the first time the company has gone with the same partner for two contracts in a row, even though the ties between the two search behemoths are now a relationship of equals - and even rivals.

Prior to the announcement there was much speculation about whether or not the Yahoo/Google marriage would last or whether the next pretender would be anointed. Google now handles a search volume more than double that of Yahoo's as measured by "search hours," and Google has nearly equaled Yahoo's 30-per-cent reach of the U.S. search audience, according to figures from Nielsen/NetRatings. Google also enjoys a cachet for "tech cool" that has long departed organizations like Yahoo! The company is private, so not prey to the whims of the markets, and along with eBay is said to be the last place where so-called dot com culture persists.

But while Google is enjoying its status as tech darling of the new century, the foundations of that status may be under attack, as other engines try to dethrone it, and the reliability and trustworthiness of search engine results as a whole comes under scrutiny.

The speed with which Google ascended the search engine hierarchy shows just how quickly companies and technologies can rise and fall in favour in the search engine world. On the surface, it would seem to be a good time to be in Google Land. The company's technology took the industry by storm due to its instantaneous results - each search result is presented with the time it took to generate the search, usually a fraction of a second -and, with Inktomi and FAST, the fact that it boasts the largest index of searched pages, along with a unique ranking system based partly on linking.

Google's news service has just been launched to much acclaim (and some horror from journalists, given that no live beings are involved in its collation; articles are ranked and featured based on the number of occurrences on a single story in all the publications scanned). Google has entered the popular vocabulary to an extent that even Yahoo! has not. "Googling someone" (putting their name through the search engine) has entered the popular vocabulary and been a part of TV scripts as high-profile as Friends - and a virtual party trick called Googlewhacking (submitting a phrase which will generate exactly one result) enjoyed a brief 15 minutes of fame last year.

But being at the pinnacle of an industry makes maintaining that position a struggle, and more significantly, Google's benign ascendancy has shifted focus away from the larger issue of how search results are ranked. A recent article in Salon took aim at Google's increasingly controversial PageRank methodology. And in order to increase its presence in the growing PPC (pay-per-click) market, Google seems to be adopting Microsoft's marketing tactics when it comes to launching new products. Its AdWords Select program had its origins in Overture's PPC (pay per click) model, and while it is definitely king in the consumer space, advertisers and vendors still prefer Overture (formerly goto.com).

Most advertisers still rank Overture's results much higher than those of Google. Some studies have suggested that Google's click-through rates run as low as 1 per cent and Overture's as high as 15 per cent for the same advertisement. Overture's partnerships are also more comprehensive: it has formed syndication agreements with MSN, Yahoo!, AltaVista and others, while Google's AdWords select partnerships include agreements with AOL, EarthLink and (in Canada) with Sympatico-Lycos.

Given that Overture's 'mindshare' is substantially lower than that of Google, these partnerships are the key to its success. While both Google and Overture have signed partnerships with Yahoo!, it is significant that Yahoo! has selected Overture's paid listings program and not Google's. Recent reports estimate that Yahoo!'s results are largely due to the success of its paid listings program with Overture, which generated more than $30-million (U.S.) in revenue for Yahoo over the past quarter.

"Revenue from Overture is extremely profitable at Yahoo, and without that revenue stream it seems quite possible that Yahoo would not have reported any operating profit over the last two quarters," said Derek Brown, an analyst at W.R. Hambrecht.

A larger issue is the quality of the information being generated, and who manages how that information is presented. Let's say your company markets high definition television sets. Buy a placement for any search conducted with the words "HDTV," and you only pay for those searches, meaning that marketers are able to target their advertising nearly perfectly on the most predominant search engine in use today.

Imagine television advertisers being able to tailor the delivery of ads to viewers who are looking for exactly that service, and you begin to understand its power. Overture's paid listings are a delight for advertisers, although less so for searchers, since the line between content and advertising is blurred: some search results don't specify which listings are paid and which are unpaid.

So far Google has done an admirable job of separating content from advertising, at least explicitly: its rankings are unaffected by placement fees, but the AdWords Select program enables ads to line up on the right side of the screen when searches are conducted containing words the advertiser has selected. It begs the question: if search engines exert a virtual stranglehold on the funneling of web content, how explicit should they be in detailing the difference between paid and editorial content?

The answer is, increasingly, driven by Mammon. Overture's pay-per-click model with its blurred lines between paid and editorial listings is where the industry is moving. Google's pretensions now are not to compete with the Yahoo!s of the world, but to take on the Microsofts. And while many former search engine darlings, such as OpenText, Inktomi and Lycos, have moved firmly into the background, Microsoft is making a slow, unheralded advance into the space in much the same way that it took on the browser wars.

"MSN.com or MSN.ca ships with every PC on the market as Internet Explorer's default search page, giving the Microsoft portal a huge home," says Brendan Kerin of SitePosition .ca.

If not Microsoft, there are other pretenders to Google's throne, including Teoma (www.teoma.com) and Alltheweb (www.Alltheweb.com), two nascent engines that are generating pre-Yahoo-Google-like buzz. Increasingly less relevant are the formerly dominant players like Inktomi (despite its two partnerships with MSN, HotBot and Overture), Altavista, and Lycos (although Lycos' presence in Europe remains strong). In terms of market share, MSN and Google are by far the leaders in the space, but that ascendancy has proved to be as ephemeral as dot-com share prices.

In short, if you are a searcher, Google is probably your best bet. If you are an advertiser, Overture should be included as a key component of your overall on-line marketing mix.

And if you are thinking of starting your own search engine, forget it. The space is as stuffed as a diner at Thanksgiving, and all bets are off as to who will take the throne in the ongoing search engine wars. You can almost count on the fact that the loser in these wars will be the consumer searching for objective information on a subject. Just try that HDTV search on Overture and you'll find dozens of companies trying to sell you a high-definition television - or a projector, or a screen, or speakers - but it's time to ready your mouse for some serious scrolling if you are in search of information. The Internet is turning into a marketplace rather than a vastly entertaining and unreliable encyclopedia: it's not content search engines are finding, but cash.


By Jennifer Evans, The Globe and Mail.
Jennifer Evans is President of Sequentia Communications in Toronto. - http://www.sequentia.com/




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